The up leg underway since early 2016 remains intact and provides trend support around 2600. The
upward acceleration in the SPX since the 2016 election has not broken in any decisive way, leaving
the SPX with a shot at regaining the highs set in Jan. The market is not at all stable, and if it is to
move higher, it needs to come up through the 25 day m/a with an up turn in the "25" to follow.
So far, the SPX is up around 1.7% on the year. It seems as if we have had year's worth of action
all rolled into a little more than two months' time. Most market strategists, although bullish on
the outlook for this year, also foresaw increased volatility as market players contend with the
expected combination of rising interest rates and profits coming along together. For most folks,
that scenario has not changed, nor has the consideration of an acceleration of inflation as the
economic expansion matures. In short, the thinking out there remains that events could lead to
occasional wobbles of the SPX p/e ratio. My fair value model suggests a single figure of SPX
2720 through mid-2019, which is where the market stands now.
There is concern that should Trump apply tariffs to both aluminum and steel imports, a larger
trade war could ensue. However, lets see if he is running a bluff first.
The lack of stability in the market at present calls for you to double check your convictions.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!